RBA Slams Brakes on Inflation with Fourth Rate Hike This Year

The Reserve Bank of Australia (RBA) has raised its cash rate to 4.6%, its highest level since 2011, in a move aimed at curbing inflation.

This is the fourth interest rate hike this year, and while it may cause pain for borrowers, RBA Governor Michele Bullock emphasized that it's necessary to bring inflation sustainably back to target.

Bullock warned that global factors, such as the conflict in the Middle East and the AI investment boom, are driving up prices and making it harder to keep inflation expectations grounded at a level lower than what inflation is at now.

The RBA's preferred trimmed mean inflation rate sat at 3.6% in July, still above its target range of 2-3%. Bullock expressed hope that the quarterly inflation figures due next month will show a decrease to around 0.6%, indicating that the yearly number is heading back towards the target range.

Market watchers are split on whether this is the last rate hike for the year, with some predicting another increase in the coming months.